The Ultimate Guide to Dropshipping Business in 2021: Step by Step

A dropshipping business is perfect for someone who wants the benefits of e-commerce without the upfront costs. You can still offer your products to customers around the world, but you never have to risk any inventory, shipping it out, or waiting for payment.

Dropshipping business is not just a trend anymore. It became one of the most popular methods of running an eCommerce dropshipping business.

But, again, no business comes without its challenges. This article will walk you through the basics of dropshipping business and how it works. We’ll also have a look at some potential pitfalls to be aware of before jumping in.

What is dropshipping?

 

Dropshipping is a retail fulfillment method where a store doesn’t keep the products it sells in stock. Instead, when a store owner receives an order from a customer, they send the order to their supplier. The latter then ships the product directly to the customer’s door.

Dropshipping business models are prevalent for online retailers. It allows them an inexpensive way to start selling right away. No need for investing in inventory upfront. Compared to traditional brick-and-mortar retail operations, the dropshipping eCommerce business is cost-effective.

How does dropshipping business work?

Now that we’ve covered what dropshipping is, let’s take a closer look at how dropshipping business works.

 

1. A customer places an order on your online store.
2. Your online store sends that order automatically to your dropshipping supplier. (the actual owner of the products)
3. The supplier receives the order and starts the fulfillment process
4. Once prepared, the dropshipping products are shipped directly to the customer.
5. Your online store receives an order notification from your supplier. Then, it processes payment for the customer.

As one of the booming eCommerce solutions, the dropshipping process is quite simple. Yet, it does have some important considerations before getting started.

As you can see, there are mainly 3 critical elements in this supply chain. They are responsible for ensuring a successful operation:

Manufacturer:

The first element in this supply chain is the manufacturer. This is where your dropshipping business products come from. Here, the supplier handles processing and shipping your customer’s orders. You can choose to use a dropshipping-only manufacturer, which only provides dropshipping services.

Or you can also find manufacturers that offer wholesale pricing. This is in case you want to carry stock at some point in the future. This is ideal for growing your business at a steady pace.

Suppliers:

The supplier is the owner of the product you sell through your online store. 

They will always be responsible for:

• Inventory, 
• Processing, 
• Shipping your customer’s orders,
• Answering any questions they have about their purchase. 

You can opt for many dropshipping suppliers to handle different products. Or, you can work with one supplier to handle every product line aspect. They are also likely to have some form of wholesale pricing. You will want to take advantage of it as your company grows.

The dropshipper:

This is you. The actual person responsible for selling dropshipping products directly to the customer. Your online business serves as the point of sale to the customer who purchases the item on your dropshipping business website.

Start a dropshipping business: Costs and revenue.

Let’s take a closer look at what is the budget for dropshipping business:

The startup costs can be pretty low for a new drop shipper. Because you aren’t required to hold any inventory, outfitting your very first warehouse is not necessary. You also won’t need to invest in any shipping equipment. The supplier you work with will provide those services.

The primary costs include:

• A domain (web address)- no more than $15/month. (paid only once)
• A simple website template can be bought for around $20-$100. It depends on your needs and the eCommerce platform you choose. (recurring every month)

For example, if you choose Shopify, you will pay for the basic package. It’s around $30+ the Oberlo subscription, which also costs $30

• You will also need a merchant account to handle credit card processing. You can use payment gateways like Stripe or PayPal. This can be obtained for around $30 a month and allows you to accept major credit cards in real-time.

• Other optional extensions will totally depend on your budget. They can be used to enhance your website performance in general.

Once your website is online, it’s time to start marketing your new business!

• Social Media accounts: One of the best ways to market your dropshipping business is through media platforms. Platforms including TikTok, Facebook, and Instagram. You will need to create accounts on these sites and get people to follow them. Engage with others in relevant communities who may be interested in buying from you. And it’s all for FREE.
• Paid ads: Another way you can use social media is for advertising. You can start with a low budget of $5/day on Facebook and see what it brings you.

Influencers: You can also reach out to influencers in your niche and see if they will promote your product for a small fee. Make sure to negotiate the fee, as influencers will get a cut on the sales.

Revenue:

When it comes to dropshipping revenue, this is where dropshipping truly shines as a business model. There are no upfront costs for holding inventory or shipping products directly to your customer. Almost all the money made from a sale goes straight into your pocket.

Your only two expenses will be advertising and the monthly fees from your merchant account and website hosting service. This lets you scale up very quickly as more sales come in from your growing audience.

The Best eCommerce Platform for Dropshipping Business

https://www.youtube.com/watch?v=aYCAacOEe0M

Nowadays, getting started with your eCommerce dropshipping business isn’t as difficult or expensive as it used to be. For beginners, there are many platforms out there to choose from to get your site up and running without needing a ton of technical knowledge.

Shopify and Amazon Dropshipping, in particular, are two popular choices for dropshipping. It’s ideal for those who want to try out dropshipping business without investing too much time or money into their business.

With so many e-commerce platforms out there to choose from, it can be tough to know which one is right for your dropshipping business. Here are the most popular and recommended ones:

Shopify Dropshipping

Shopify is by far one of the best dropshipping platforms if you’re just starting. Its mobile-friendly design makes it easy to sell products on social platforms. Or simply wherever you choose to advertise your brand online. And when it comes to scaling up your business, later on, Shopify’s excellent range of features will give you an edge over other dropshippers.

• Shopify (with Oberlo)

Oberlo allows shippers to source dropshipping products from anywhere through its global market. Sellers can buy these products in bulk, attach an image of each product to Oberlo, and list them on Shopify. Moreover, products are automatically synced to your store’s inventory after they’ve been sold.

Oberlo also has a mobile-friendly app you can download. There is also an online marketplace built for e-commerce entrepreneurs like yourself. It’s ideal for those looking to make money through dropshipping..

Amazon Dropshipping

The great thing about dropshipping on Amazon is its huge global audience of potential customers. You can market directly to them from your store.

Another great benefit of dropshipping on amazon is the variety of apps and tools you have access to. Amazon provides all the necessary features needed to run a successful dropshipping business. This includes autocomplete search bars, product comparison widgets, quick search bars, and more.

Shift4Shop Dropshipping

Shift4shop has all the tools you need to start an eCommerce business, including drop shipping. The platform is fully customizable, so you can easily brand your dropshipping store to your liking. 

It helps you:

• connect with drop shippers, 
• get accurate shipping rates, 
• automate product imports to your dropshipping business, 
• and send emails to new orders and cancellations. 

This gives you the ability to grow your business with zero headaches.

BigCommerce Dropshipping

BigCommerce is a great option for dropshipping. It lets you control your entire site to make sure everything looks exactly how you want. You can also use their built-in analytics tools to track which dropshipping products are selling and which ones aren’t.  It gives you the data necessary to make informed business decisions.

Using BigCommerce for your dropshipping store also means that your supplier will handle all returns and refunds. He takes on that added responsibility off of your shoulders. This frees up more time for you to focus on other aspects of growing and marketing your store.

Alibaba Dropshipping

Alibaba is also one of the most popular choices for dropshipping businesses. Its huge selection of wholesale products at very low prices. Unlike Amazon, where you have to buy items in bulk, Alibaba lets you order as many or as little as you want.

The downside to using Alibaba is that there are quite a bit more scams. There are also people who will try to take advantage of your inexperience as a seller. Make sure to do your research. Choose products from suppliers who have excellent reviews and ratings.

It’s easy to get started with Alibaba. All you need is a computer or mobile device, internet connection, and a little bit of research done on your end. This will allow you to find dropshipping suppliers that have great reputations. It also gives you access to cheap dropshipping products that can be resold for a profit!

How to start your dropshipping business in 6 simple steps:

Here are 6 simple steps to starting a drophipping business:

• Find winning products

• Research  dropshipping suppliers

• Set up your online dropshipping store

• Register your business

• Start marketing & Promoting

• Offer customer support & service 

Step 1: Find winning dropshipping products

The first step to finding winning products is to choose a specific niche that you want to target. This means that the product you will be selling should target one specific demographic, like men’s clothing or children’s toys. Once you’ve decided which type of product you’ll be selling, it’s time to search online for similar products.

Look for items with a few hundred or even just dozens of reviews as long as the product has good overall ratings (4 stars or more). This gives you much more room to mark up the price without scaring away customers looking for cheap products to buy!

Step 2: Research suppliers who can drop ship to your customers

At this stage, you’ve already found a profitable niche and winning dropshipping products. Now, it’s time to find a supplier that can dropship directly to your customers. 

There are plenty of places where you can find wholesale suppliers. Yet,  the biggest and most popular platforms are Alibaba and eBay. When choosing a supplier, keep in mind the reviews and ratings so you cut your risk of getting scammed.

Step 3: Set up your own eCommerce store

Now it’s time to set up your actual eCommerce store where you’ll be selling dropshipping products to people! If you already have a website built, then just add a marketplace or online shop plugin to it if it doesn’t have one yet. If not, I suggest building a website from scratch. You can use platforms like Shopify, Weebly, or Wix. They offer free websites for up to a certain amount of pages. They also have drag and drop website builders who make setting up a store a breeze.

Once you’ve set up your dropshipping store, it’s time to add all the winning products that you chose earlier into your store. 

The best way to do this is to first write out each product name. Then, copy and paste or type in each product description directly onto the page. This ensures every item has the correct information and will appear properly on your storefront.

Step 4: Register your business and sort legal requirement

Some eCommerce businesses, including dropshipping, may require a business license. This is quite common, especially if they are located in the United States.

 

In most US states, this can usually be done online or by mail and costs around $50-$200 depending on where you live.

You’ll also need to register your business with your local tax office. Likewise, you can collect sales taxes from customers required of all eCommerce companies. Again, this varies based on the state or country that you live in. 

However,  it’s usually a very simple process by mail or online and requires only a small fee. The fee will likely pay for itself over time thanks to all the new sales taxes you’ve collected! Your accountant can help you sort this out if you’re not sure how to go about it yourself.

Step 5: Start selling dropshipping products.

Now that everything is set up, it’s time to start marketing and promoting your eCommerce dropshipping store! The easiest way to start bringing in customers is by using paid advertising such as Facebook ads or Google Adwords, for example. These ads allow you to target people searching for specific products and have them directed to your store with just a few clicks.

In addition to paid ads, you can also use social platforms such as Instagram or Pinterest. They allow you to share images of your products which may lead people back to your shop! This is a great way to organically grow your eCommerce store without needing an initial budget for marketing.

Step6: Offer the best customer support /service

Customer support is crucial when running a successful business. It’s even more vital when you’re dropshipping. When you don’t have a physical store, customers can’t go anywhere for orders’ inquiries. Make sure that all your listings include customer photos and order reviews. Likewise, customers can leave feedback about their experience with you.

You should also offer a great FAQ section on your website.  This section should include all frequently asked questions you get. This way, whenever someone has an issue, they know where to go. Eventually, they resolve it themselves without needing to contact you directly.

5 ways to find winning dropshipping products:

First, let’s have a look at what makes a winning product:

A winning product has the following features:

• Good Profit margin
• Low to medium competition
• Solves some kind of problem
• High demand.

In all, it must have that WOW factor.

A strong branding strategy can help you to stand out from your competitors. But, only if the product itself is also unique in some way.

Finding the right product to drop ship is not always an easy task. It can be extremely lucrative once you find one that works!

Here are several ways on how to find great dropshipping products to sell:

TikTok

Yes, believe it or not, TitkTok can be a great place to source hot-selling products! TikTok is the leading product discovery platform. It displays over 1.5 million trending products from around the world. If you’re interested to know more details on how to find these products using Tiktok, read here.

Facebook

You can tailor your Facebook feeds to show you dropshipping ads regularly. Likewise, you can use the different Facebook groups to find new products that are trending. Also, don’t just ‘like’ random ads. Try to interact with them and see if it’s a good product to sell. You can also look at the “info and ads section” of Facebook pages to see some of the products they’re selling.

Amazon.com

Amazon is a very competitive marketplace. But you can still find interesting and trending products. To do this you have to head over to Amazon. Type some targeted market-related keywords in their search bar. Then, click “see all” instead of just clicking one specific product. You’ll be able to see the ‘Customers also bought’ section. It shows you products that are similar in nature to your chosen one. Check them out and start selling some of these products as well.

Aliexpress

If you haven’t already heard about Aliexpress, where have you been? Aliexpress is a huge wholesale marketplace. You can find many trending products to sell. Simply search and pick some keywords related to your product and sort them by order. Those are usually the best-selling products you can check out. However, make sure to get some in-depth product insights before deciding.

Recent crowdfunding projects

Crowdfunding sites like Kickstarter and IndieGogo are great places to discover new products. Products that haven’t been brought to market yet. There are successful campaigns for items that you can buy wholesale and sell on your own! But, you may need your own storage place.

How to find the best dropshipping suppliers?

https://www.youtube.com/watch?v=fS3ilpU9M1I

When looking for suppliers, there are a few things you should look out for. They need to be:

• Reliable 
• Trustworthy
• Responsive
• Easy reach through different communication channels.

The best way to find them is by using the same platforms as above, Aliexpress, Alibaba, Amazon, eBay, and more, but smartly.

The following list includes other sources where you can find suppliers for your dropshipping business:

• CJDropshipping: Dedicated to just connecting you with reputable and trustworthy dropshipping suppliers. They have a network of warehouses all around the world. 

• SaleHoo: This is a site that has over 8000+ vetted suppliers from all around the world. If you’re looking for cheap wholesale items to sell, SaleHoo will be your best friend.

• Spocket: One of the newest players on the market. Spocket is a platform where you can find and connect with wholesalers and dropshipping suppliers.

• BigBuy: specifically designed for Europe dropshipping suppliers.

• Udroppy: You can find verified suppliers in the USA. It’s great if you’re looking for US-based dropshipping wholesale resources.

• HyperSKU: is a platform that specializes in products from the E-commerce and outdoor industries.

Tips for success in your new Dropshipping business in 2021

https://www.youtube.com/watch?v=cKIZaZ-4YR0

Here are some tips and ideas for getting started selling online.

1. Offer a free shipping option on all orders regardless of price point

This helps to attract more customers who may have been turned off by high shipping charges in the past. If they don’t add up in their order, simply refund the difference after. With a low-cost startup cost, this shouldn’t be too difficult to manage.

2. Create a return policy that easily solves customer problems and complaints 

Customers need to know that they can return an item if it’s defective or not what they expected. The process needs to be quick and effortless. This will allow the customer to shop with you again in the future without any doubts as to their purchase. Also, make sure to include your refund policy for those who want to take advantage of this as well. Likewise, your customers know how much time they have before this option expires.

3. Things that you need to look for in  dropshipping suppliers:

 

• Their products should have positive reviews.

The more customer feedback that an item or business has, the less likely it is to be a scam. Try to find dropshipping distributors that have a lot of reviews on their site. Yet, make sure they are not easy to fake!

• How quickly do they ship?

A dropshipper is useless if they don’t get an item shipped out in time. A typical eCommerce customer expects most things to be delivered within one or two days. So you need to find a supplier who can meet these demands instead of letting an order slip through the cracks. This is especially important with larger items like clothing. Even overnight shipping won’t be fast enough! If you find one whose delivery times are too slow, you should move on to another supplier.

• Their products must be competitively priced.

There’s no chance you’ll make a profit if your prices are higher than everyone else in your market. Offer your customers high-quality items at fair prices, and they will come back to you again and again! Customers love saving money which is why they shop online instead of going to a physical store in the first place.

Pros & Cons of dropshipping business

As with most things, there are some pros and cons associated with the dropshipping model. Here’s a look at each side so that retailers can consider all aspects before deciding if dropshipping is right for them.

Benefits of dropshipping business :

• Location independence

It allows you to run a business completely online and be your own boss. You will not have to worry about paying any rent for a storefront. It’s also a great option for people who would rather work from home and avoid the hassle of commuting to work every morning.

• Low cost of entry

There is no need to buy wholesale goods and ship them to customers. Instead, suppliers handle all of the heavy liftings, which means you’re only responsible for placing orders as a retailer… no upfront costs required.

• Your goods are never in your possession.

Dropshipping distributors will pack & ship all orders with their own branding. So you don’t have to worry about any legal ramifications of having someone else’s product on your premises

• Ease of use

It requires very little technical knowledge to launch an online business. No worries about shopping carts or managing payment gateways. Your dropshipping suppliers handle those.

Challenges of Dropshipping:

• Suppliers can change or go out of business

While it’s not as common, there is a chance you’ll lose access to your supplier. It can be expensive to move from one wholesale company to another, especially if you’ve already paid them a large sum upfront. Not having a reliable product source will hurt your business. It’ll lead to many wasted hours trying to find a new supplier that meets all the criteria listed above!

• Location & Tax Restrictions

Some dropshipping suppliers may not ship their products anywhere outside of the US. Make sure to research this before placing orders. So you don’t get stuck paying more than necessary! 

Also, consider the fact that many countries charge extra taxes on online orders. That means unless your supplier already charges those taxes, you may end up losing money as a retailer.

• Personalization is limited

For many retailers, one of the biggest drawbacks of dropshipping is that they won’t control how their products are displayed on their site. The images and descriptions come directly from their supplier’s catalogs. Retailers looking for more custom branding will need to look elsewhere. Unfortunately, this business model doesn’t allow much personalization.

11 Common Mistakes Dropshipper beginners do

Dropshippers beginners make a lot of mistakes that drive away customers and damage their reputation.

Here are some of the most common mistakes that beginners should avoid:

• Not taking dropshipping business models seriously. It’s not something you should take lightly. Then, expect to make your way in the world of business. 

• Not checking shipping times BEFORE choosing which countries to sell.

• Not networking with suppliers and building trustful long-term relations with them. It’s important to know who you are working with.

• Not having any social presence. Even just starting a Facebook page can help build up a following over time. It can become an asset when running your dropshipping store.

• Poor product descriptions. The best way to convince customers that your products are the best is through well-written product descriptions.

• Not doing market research. It’s important that you have a solid understanding of the market and who your target audience is. This includes brands they like, their shopping behaviors, and more.

• Using poor quality photos or no product photos at all. If customers can’t see what the products look like, they won’t be able to make a purchase decision.

• No marketing plan. Marketing should be at the top of your priority list if you are just starting out.

• Not having a rock-solid refund policy. Include return policies and customs documentation in your supply contract. Likewise you avoid any unwanted legal implications.

• Poor customer service. Your customers will want to reach out for help or get updated on shipping, etc… Make sure you are prepared to handle these requests and provide excellent customer service. Don’t be one of the average dropshippers.

• No strategy for growth. Any business needs to have some sort of growth strategy in place because it opens up doors to new opportunities. Many dropshippers forget about this, so be sure to write down some goals for your business and how you plan to achieve them.

Dropshipping business done right: How to expand your eCommerce business:

You can easily expand your business without the drawback of having to risk losing money.

However, looking at how to expand your eCommerce dropshipping business when it comes to dropshipping will depend on your goals for the business. You need to have a solid understanding of why you are doing this in the first place.

3 Ways to expand an eCommerce Business:

1.) Increase traffic through SEO and PPC ads.

2.) Expand into different niches with related products.

3.) Cross-sell/Upsell items your customers may also desire based on their purchase history or browsing behavior.

4) Start testing international markets to sell to customers, not just in your country.

It’s important to have a goal in mind with whatever you plan on doing next as well as a solid strategy. This will provide you with direction and help you with making decisions.

But at a point in this cycle, you’ll leverage the benefits of dropshipping. Only then, you’ll start thinking of scaling your online store.

You may want to consider running things in-house and be in full control of the supply chain. This can include collaborating with a third-party supplier, order fulfillment services, and more.

Dropshipping for Beginners: Common Asked Questions

• Is dropshipping legal?

Yes. It’s considered a viable option for order fulfillment via law. However, you need to make sure that your dropshipping suppliers are registered businesses not to break any laws.

• What will be the impact of dropshipping in 2021?

Dropshipping remains one of the competitive businesses out there. Customers expect to be able to find everything they need from the comfort of their homes. In 2021, more and more customers are turning to online stores for products. It becomes second nature to them over time due to the increasing popularity of eCommerce platforms. The impact of dropshipping in 2021 is that it will continue to grow and become more competitive as there is a high demand for this type of service.

• Why is dropshipping bad?

Some people perceive dropshipping badly. There is the lack of quality control and a high number of counterfeit products being sold under the guise of dropshipping. Although this does happen, it is not something that you have to put up with if you do your research and choose reputable suppliers.

• How can I avoid dropshipping scams?

Dropshipping scams are one of the biggest problems facing new entrepreneurs. You can avoid them by doing your due diligence on any company or supplier before signing any contracts. If a company is not willing to provide you with a full list of registered business information and other materials, then walk away from the deal.

• How profitable is dropshipping?

Dropshipping is a very profitable business model to get into due to the minimal risk involved. You can start this type of business with minimal investment. It is perfect for entrepreneurs who want the benefits of eCommerce without the upfront costs. However, it’s not easy money, as many people claim. A lot of work goes into running a successful dropshipping business that many people don’t take the time to learn properly.

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